Expeditors Reports Second Quarter 2018 EPS of $0.79

Source: Nasdaq GlobeNewswire / 07 Aug 2018 10:44:44 America/New_York

SEATTLE, Aug. 07, 2018 (GLOBE NEWSWIRE) -- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second quarter 2018 financial results including the following highlights compared to the same quarter of 2017:

“We continued to add profitable growth from new and existing customers during the quarter, particularly in air and some of our differentiated, best-in-class services, such as brokerage, Transcon, and order management,” said Jeffrey S. Musser, President and Chief Executive Officer. “Similar to the first quarter of this year, we remained disciplined on pricing in this strong economy. We experienced strong performance in our ocean forwarding and order management businesses, but ocean freight net revenues were down 5% on a 1% increase in volumes, as carriers took steps to mitigate the impact of volatile pricing, excess capacity, and higher fuel costs.

“We are continuing to invest in people and assets in the development and support of profitable revenue growth, most notably during Q2 in Europe and North America. While we have yet to see changes to supply chains as a result of possible trade wars, we are confident in the capabilities of our people throughout our global network to help our customers navigate the potential impact of new tariffs.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added that the Company’s effective tax rate for the quarter was 25.8%, compared to 37.4% a year ago. The lower effective tax rate in the most recent quarter was principally due to the lower U.S. federal tax rate that resulted from the 2017 Tax Act, coupled with significant share-based compensation deductions from stock option exercises during the quarter. Mr. Powell emphasized that the Company’s effective tax rate in future periods will largely depend on the mix of pretax earnings that are generated in its U.S. versus foreign operations, as well as further interpretation of, and guidance to be issued on, the new tax law.

Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 177 district offices and numerous branch locations located on six continents linked into a seamless worldwide network through an integrated information management system. Services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, time-definite transportation, order management, warehousing and distribution and customized logistics solutions.

_______________________1Diluted earnings attributable to shareholders per share.2Non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. See reconciliation on the last page of this release.NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.

Expeditors International of Washington, Inc.Second Quarter 2018 Earnings Release, August 7, 2018Financial Highlights for the Six months ended June 30, 2018and 2017 (Unaudited)(in 000's of US dollars except per share data)

Three months ended June 30,

Six months ended June 30,

2018

2017

% Change

2018

2017

% Change

Revenues1

$

1,957,559

$

1,672,279

17

%

$

3,811,821

$

3,217,411

18

%

Net revenues2

$

642,546

$

563,633

14

%

$

1,278,384

$

1,091,238

17

%

Operating income3

$

183,584

$

168,240

9

%

$

376,402

$

314,354

20

%

Net earnings attributable to shareholders

$

140,605

$

108,851

29

%

$

276,297

$

202,115

37

%

Diluted earnings attributable to shareholders per share

$

0.79

$

0.60

32

%

$

1.54

$

1.11

39

%

Basic earnings attributable to shareholders per share

$

0.80

$

0.60

33

%

$

1.58

$

1.12

41

%

Diluted weighted average shares outstanding

178,603

182,033

179,120

182,091

Basic weighted average shares outstanding

174,754

180,012

175,324

180,037

_______________________1Effective January 1, 2018, the Company adopted required new revenue recognition guidance, resulting in a $22 million net reduction to the opening balance of retained earnings. In addition, in conjunction with the adoption of new revenue recognition guidance, the Company also changed the presentation of certain warehouse and distribution revenues from a net to a gross basis, which increased both revenues and operating expenses in customs brokerage and other services by approximately $50 million in both the first and second quarters of 2018. Comparative prior year revenues (and the related volume information in the table below) has not been adjusted and continue to be reported under the Company's historical policies. 2018 reported revenues (and the related volume information) are reported under the Company's new revenue recognition accounting policies.

2Non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. See reconciliation on the last page of this release.

3The quarter and year-to-date periods ended June 30, 2017 include the recovery of certain legal and related fees totaling $8 million and the favorable resolution of an indirect tax contingency of $6 million.

During the three and six-month periods ended June 30, 2018, we repurchased 3.1 million and 5.8 million shares of common stock at an average price of $76.22 and $70.92 per share, respectively. During the three and six-month periods ended June 30, 2017, we repurchased 1.5 million and 2.5 million shares of common stock at an average price of $55.02 and $55.58 per share, respectively.

Employee Full-time Equivalents as of June 30,

2018

2017

North America

6,414

6,009

Europe

3,205

2,847

North Asia

2,616

2,698

South Asia

1,604

1,602

Middle East, Africa and India

1,466

1,531

Latin America

801

791

Information Systems

892

881

Corporate

351

390

Total

17,349

16,749

Second quarter year-over-year percentage increase (decrease) in:

Airfreight kilos

Ocean freight FEU

2018

April

1%

(2)%

May

6%

5%

June

6%

—%

Quarter

4%

1%

_______________________Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 10, 2018 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about August 24, 2018.

Disclaimer on Forward-Looking Statements:Certain portions of this release contain forward-looking statements, which are based on certain assumptions and expectations of future events that are subject to risks and uncertainties, including comments on our ability to generate profitable market growth; our ability to help our customers navigate the potential impact of new tariffs; the impact of the 2017 Tax Act on our effective tax rate; energy and fuel prices; political changes; changes and uncertainties in governmental policies and inter-governmental disputes; foreign exchange rates; regulatory actions or changes; and risk factors and uncertainties detailed in our Annual Report as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission.

We commonly refer to the term “net revenues” when commenting about our Company and the results of its operations. Net revenues are a Non-GAAP measure calculated as revenues less directly related operations expenses attributable to the Company's principal services. We believe that net revenues are a better measure than are total revenues when analyzing and discussing our effectiveness in managing our principal services since total revenues earned as a freight consolidator must consider the carriers' charges to us for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by us. Net revenues are one of our primary operational and financial measures and demonstrates our ability to concentrate and leverage purchasing power through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings. Using net revenues also provides a commonality for comparison among various services. The following table presents the calculation of net revenues.

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